South Korea's economy is likely to fall into recession as domestic demand and exports, the nation's twin growth engines, dwindle sharply in the face of a global economic downturn, Yonhap News reported quoting a state-funded think tank Wednesday.
"The possibility of a recession is running high as domestic demand and exports fall sharply," the Korea Development Institute (KDI) said in a monthly report that assesses the nation's economic trends.
The report cited shrinking industrial production, consumer spending, investment and exports as reasons for its gloomy assessment of Asia's fourth-largest economy.
Industrial production plunged to an all-time low in November, with output contracting 14.1 percent from a year earlier. Sales of consumer goods contracted 5.9 percent over the same period as people scaled down spending on high-priced durable goods for fear of worsening economic conditions, according to the report.
Indicators also suggested that the contraction in investment is "accelerating," the report said. Equipment investment plunged 19.4 percent in November from a year earlier.
Exports and imports showed a "marked" decrease amid the worsening economic downturn at home and abroad with their unit prices also falling, the report showed.
In November, overseas sales contracted 17.4 percent, while imports plunged 21.5 percent due to falling prices of oil and raw materials.
Adding to the woes, deteriorating job markets were weighing on the economy, the report said. The number of newly created jobs in November stood at 78,000 in November, compared with a year earlier, far below the government's annual target of 200,000 jobs.
The gloomy economic conditions come as the government is struggling to kick-start the economy, which is slowing at a faster-than-expected pace.
In the third quarter of last year, the growth slumped to 0.5 percent, the lowest in almost four years, according to the Bank of Korea. The central bank has projected the economy to grow 2 percent this year.
Finance Minster Kang Man-soo said Sunday that the economy is likely to recover gradually from a slump sparked by the global business downturn from the second half of this year.